Company valuation and growth

This thesis is centered on company valuation with a special emphasis on growth. A theoretical study proposes an alternative way to value companies by introducing the government as an explicit claimholder in a growing perpetuity framework. Next the three most common valuation models, i. e., the Dividend Discount Model, the Residual Income Model and the Discounted Cash Flow Model, are extended to account for deviations from ideal conditions, e. g., dirty surplus accounting. These extensions also allow to analyze different steady state assumptions, i. e., how growth can be modeled consistently. The proposed models are empirically tested using a large US dataset. Finally, the valuation model for high-technology growth fi rms developed by Schwartz-Moon (2000) is discussed and tested on a representative sample. Results from this fi rst model test show that it performs reasonably well.